diff --git a/arch/powerpc/include/asm/kvm_host.h b/arch/powerpc/include/asm/kvm_host.h
index 827a38d..8a652ba 100644
--- a/arch/powerpc/include/asm/kvm_host.h
+++ b/arch/powerpc/include/asm/kvm_host.h
@@ -243,6 +243,7 @@ struct kvm_arch {
 	int hpt_cma_alloc;
 	struct dentry *debugfs_dir;
 	struct dentry *htab_dentry;
+	u8 fwnmi_enabled;
 #endif /* CONFIG_KVM_BOOK3S_HV_POSSIBLE */
 #ifdef CONFIG_KVM_BOOK3S_PR_POSSIBLE
 	struct mutex hpt_mutex;
diff --git a/arch/powerpc/kernel/asm-offsets.c b/arch/powerpc/kernel/asm-offsets.c
index 221d584..6a4e81a 100644
--- a/arch/powerpc/kernel/asm-offsets.c
+++ b/arch/powerpc/kernel/asm-offsets.c
@@ -506,6 +506,7 @@ int main(void)
 	DEFINE(KVM_ENABLED_HCALLS, offsetof(struct kvm, arch.enabled_hcalls));
 	DEFINE(KVM_LPCR, offsetof(struct kvm, arch.lpcr));
 	DEFINE(KVM_VRMA_SLB_V, offsetof(struct kvm, arch.vrma_slb_v));
+	DEFINE(KVM_FWNMI, offsetof(struct kvm, arch.fwnmi_enabled));
 	DEFINE(VCPU_DSISR, offsetof(struct kvm_vcpu, arch.shregs.dsisr));
 	DEFINE(VCPU_DAR, offsetof(struct kvm_vcpu, arch.shregs.dar));
 	DEFINE(VCPU_VPA, offsetof(struct kvm_vcpu, arch.vpa.pinned_addr));
diff --git a/arch/powerpc/kvm/book3s_hv.c b/arch/powerpc/kvm/book3s_hv.c
index 2280497..1b1dff0 100644
--- a/arch/powerpc/kvm/book3s_hv.c
+++ b/arch/powerpc/kvm/book3s_hv.c
@@ -859,15 +859,9 @@ static int kvmppc_handle_exit_hv(struct kvm_run *run, struct kvm_vcpu *vcpu,
 		r = RESUME_GUEST;
 		break;
 	case BOOK3S_INTERRUPT_MACHINE_CHECK:
-		/*
-		 * Deliver a machine check interrupt to the guest.
-		 * We have to do this, even if the host has handled the
-		 * machine check, because machine checks use SRR0/1 and
-		 * the interrupt might have trashed guest state in them.
-		 */
-		kvmppc_book3s_queue_irqprio(vcpu,
-					    BOOK3S_INTERRUPT_MACHINE_CHECK);
-		r = RESUME_GUEST;
+		/* Exit to guest with KVM_EXIT_NMI as exit reason */
+		run->exit_reason = KVM_EXIT_NMI;
+		r = RESUME_HOST;
 		break;
 	case BOOK3S_INTERRUPT_PROGRAM:
 	{
diff --git a/arch/powerpc/kvm/book3s_hv_rmhandlers.S b/arch/powerpc/kvm/book3s_hv_rmhandlers.S
index b98889e..f43c124 100644
--- a/arch/powerpc/kvm/book3s_hv_rmhandlers.S
+++ b/arch/powerpc/kvm/book3s_hv_rmhandlers.S
@@ -147,7 +147,6 @@ END_FTR_SECTION_IFSET(CPU_FTR_ARCH_207S)
 	addi	r1, r1, 112
 	ld	r7, HSTATE_HOST_MSR(r13)
 
-	cmpwi	cr1, r12, BOOK3S_INTERRUPT_MACHINE_CHECK
 	cmpwi	r12, BOOK3S_INTERRUPT_EXTERNAL
 	beq	11f
 	cmpwi	cr2, r12, BOOK3S_INTERRUPT_HMI
@@ -160,7 +159,6 @@ END_FTR_SECTION_IFSET(CPU_FTR_ARCH_207S)
 	mtmsrd	r6, 1			/* Clear RI in MSR */
 	mtsrr0	r8
 	mtsrr1	r7
-	beq	cr1, 13f		/* machine check */
 	RFI
 
 	/* On POWER7, we have external interrupts set to use HSRR0/1 */
@@ -168,8 +166,6 @@ END_FTR_SECTION_IFSET(CPU_FTR_ARCH_207S)
 	mtspr	SPRN_HSRR1, r7
 	ba	0x500
 
-13:	b	machine_check_fwnmi
-
 14:	mtspr	SPRN_HSRR0, r8
 	mtspr	SPRN_HSRR1, r7
 	b	hmi_exception_after_realmode
@@ -2381,24 +2377,27 @@ machine_check_realmode:
 	ld	r9, HSTATE_KVM_VCPU(r13)
 	li	r12, BOOK3S_INTERRUPT_MACHINE_CHECK
 	/*
-	 * Deliver unhandled/fatal (e.g. UE) MCE errors to guest through
-	 * machine check interrupt (set HSRR0 to 0x200). And for handled
-	 * errors (no-fatal), just go back to guest execution with current
-	 * HSRR0 instead of exiting guest. This new approach will inject
-	 * machine check to guest for fatal error causing guest to crash.
-	 *
-	 * The old code used to return to host for unhandled errors which
-	 * was causing guest to hang with soft lockups inside guest and
-	 * makes it difficult to recover guest instance.
+	 * Deliver unhandled/fatal (e.g. UE) MCE errors to guest
+	 * by exiting the guest with KVM_EXIT_NMI exit reason (exit
+	 * reason set later based on trap). For handled errors
+	 * (no-fatal), go back to guest execution with current HSRR0
+	 * instead of exiting the guest. This approach will cause
+	 * the guest to exit in case of fatal machine check error.
 	 */
-	ld	r10, VCPU_PC(r9)
-	ld	r11, VCPU_MSR(r9)
-	bne	2f	/* Continue guest execution. */
-	/* If not, deliver a machine check.  SRR0/1 are already set */
-	li	r10, BOOK3S_INTERRUPT_MACHINE_CHECK
+	bne	2f	/* Continue guest execution? */
+	/* If not, check if guest is capable of handling NMI exit */
+	ld	r3, VCPU_KVM(r9)
+	ld	r3, KVM_FWNMI(r3)
+	cmpdi	r3, 1		/* FWNMI capable? */
+	bne	1f	/* Deliver machine check via guest's 0x200 vector */
+	b	mc_cont
+1:	li	r10, BOOK3S_INTERRUPT_MACHINE_CHECK
 	ld	r11, VCPU_MSR(r9)
 	bl	kvmppc_msr_interrupt
-2:	b	fast_interrupt_c_return
+	b	fast_interrupt_c_return
+2:	ld	r10, VCPU_PC(r9)
+	ld	r11, VCPU_MSR(r9)
+	b	fast_interrupt_c_return
 
 /*
  * Check the reason we woke from nap, and take appropriate action.
diff --git a/arch/powerpc/kvm/powerpc.c b/arch/powerpc/kvm/powerpc.c
index 2e51289..3e57636 100644
--- a/arch/powerpc/kvm/powerpc.c
+++ b/arch/powerpc/kvm/powerpc.c
@@ -567,6 +567,9 @@ int kvm_vm_ioctl_check_extension(struct kvm *kvm, long ext)
 		r = 1;
 		break;
 #endif
+	case KVM_CAP_PPC_FWNMI:
+		r = 1;
+		break;
 	default:
 		r = 0;
 		break;
@@ -1129,6 +1132,10 @@ static int kvm_vcpu_ioctl_enable_cap(struct kvm_vcpu *vcpu,
 		break;
 	}
 #endif /* CONFIG_KVM_XICS */
+	case KVM_CAP_PPC_FWNMI:
+		r = 0;
+		vcpu->kvm->arch.fwnmi_enabled = true;
+		break;
 	default:
 		r = -EINVAL;
 		break;
diff --git a/include/uapi/linux/kvm.h b/include/uapi/linux/kvm.h
index a9256f0..2daf4b4 100644
--- a/include/uapi/linux/kvm.h
+++ b/include/uapi/linux/kvm.h
@@ -824,6 +824,7 @@ struct kvm_ppc_smmu_info {
 #define KVM_CAP_MULTI_ADDRESS_SPACE 118
 #define KVM_CAP_GUEST_DEBUG_HW_BPS 119
 #define KVM_CAP_GUEST_DEBUG_HW_WPS 120
+#define KVM_CAP_PPC_FWNMI 121
 
 #ifdef KVM_CAP_IRQ_ROUTING
 
